Entrepreneurial activity involves new venture creation (Vesper, 1996) and new entry into promising markets (Lumpkin & Dess, 1996). These efforts revolve around a core process: recognizing opportunity (Kirzner, 1973). The findings reported in this paper suggest that opportunity recognition does have distinctive characteristics that can be identified and tested. In particular, we suggest that the opportunity search and identification characteristics of individual entrepreneurs tend to fall into two broad categories: a solo activity that involves creativity by opportunistic entrepreneurs who have a good feel for the market and a network activity, that is, entrepreneurs who learn of opportunities through contacts with others and assess their viability through open discussion and trial and error. These two opportunity recognition modes, in turn, are uniquely related to other personal preferences and features of business creation.
The paper has both academic and practical implications, and we have identified a number of issues for future research. For example, the importance of such characteristics as "alertness" and creativity may be affected by the quality and quantity of network contacts. Also, can alertness be taught and can creativity exercises help improve training and academic programs on entrepreneurship. The strong results in Table 4 should stimulate greater creative experimentation with new teaching methods.
A key limitation of this study is the single item used to distinguish between solo and network entrepreneurs. We chose to proceed with the single item measure for three reasons: (1) this is an exploratory study; (2) there was a 50/50 breakdown of network vs. solo entrepreneurs which was consistent with Koller's (1988) finding; and (3) the results are consistent with social network theory. Multi-item measures should be used in future research to make an effort to more fully identify these distinctions, particularly the concept of entrepreneurs as "networked." The entrepreneurship literature abounds with articles about the lone wolf entrepreneur venturing into the unknown with little more than high hopes and a good idea. But the idea of the network entrepreneur is far less understood. What is the nature of the network that supports entrepreneurial activity? Are there important differences, as some authors have suggested, between the strong ties and weak ties (Granovetter, 1973) in an entrepreneur's network? How does the process of network development and growth parallel, support, or conflict with organizational growth? More fundamentally, how do opportunity recognition and networking interact to contribute to firm performance? The research reported here only begins to address these important issues.
In general, the performance implications of the opportunity recognition process is another area that remains largely unexplored in the opportunity recognition literature. At the firm level of analysis, a key aim of future research should be to investigate how opportunity recognition and performance are linked. For example, Table 2 indicates that network entrepreneurs pursue more opportunities than solo entrepreneurs. We might argue that network entrepreneurs have access to more opportunities through their contacts while SEs take a more cautious approach, requiring that they fully understand and have personal experience with the entrepreneurial opportunity. The question then becomes, what difference, if any, is there in the quality of opportunities? In addition to having more ideas, network entrepreneurs may have more refined ideas than their solo counterparts due to the opportunity screening performed by their social network ties. If this were so, we might expect network entrepreneurs to have a higher rate of success. But there were no significant differences reported in the number of successes between the two groups (see Table 2). Does this mean that network entrepreneurs not only pursue more but also succeed with more opportunities than solo entrepreneurs? To answer such questions, more extensive measures of performance as well as research studies involving finer-grain analysis and longitudinal data would enrich our understanding of the opportunity recognition--firm performance relationship.
While this exploratory paper expands the theoretical understanding of opportunity recognition, future research is certainly needed to further develop the theory of this important part of the entrepreneurship process.
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Last Updated 03/19/98